Regulatory Ramblings

Hong Kong’s New Virtual Asset Regulatory Regime/Framework: A Milestone for Asia

June 28, 2023 Reg/Tech Lab - HKU-SCF FinTech Academy - Asia Global Institute - HKU-edX Professional Certificate in FinTech
Regulatory Ramblings
Hong Kong’s New Virtual Asset Regulatory Regime/Framework: A Milestone for Asia
Show Notes

Hong Kong's new virtual asset regulatory regime went into effect on June 1. Much of the fanfare surrounding it stems from the notion that retail investors in the territory will soon be able to purchase cryptocurrencies and digital assets, writ large, from licensed exchanges. Clearly, the SAR is positioning itself to become a virtual asset hub, with the start of applications for licenses to run trading platforms and exchanges already underway.
Trading of cryptocurrencies in the city has been restricted to institutional investors and other professionals since 2018, but Hong Kong's local regulations will allow retail trading as soon as the second half of 2023.
Local officials have stated that the initiative to welcome crypto is backed by safeguards for investors. The move comes amidst a background of tough global regulatory headwinds for the sector.

Our guests this episode are Hong Kong-based Vince Turcotte and his London-based colleague, Jonathan Dixon, from Eventus – a global provider of trade surveillance and market risk solutions for multiple asset classes such as equities, options, futures, foreign exchange, fixed income, and digital assets.

They chat with Regulatory Ramblings host Ajay Shamdasani on why the territory's new virtual asset trading platform (VATP) rules are such an important milestone for retail access to digital assets in Asia - as evidenced by the Licensing Handbook for Virtual Asset Trading Platform Operators from the SAR's capital markets watchdog, the Securities and Futures Commission.

In particular, the guests note that through its actions, the SFC is staking out a global leadership position on regulating virtual assets: because the SFC is the first and only regulator to require market surveillance. Also discussed are whether other international regulators follow the SFC’s lead, alongside the potential pitfalls that service providers, investors and others may face in complying with the city's VATP rules, and whether digital exchanges and other platform providers are starting from a position of strength and preparedness generally.

Additionally, Turcotte and Dixon share their views on the most common VATP queries from their clients, as well as if more regulation might be needed as retail investors continue flocking to virtual assets. The conversation concludes with an outline of key steps local trading platform providers need to take – especially regarding licensing requirements.

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